Question 8Homework • Answered ⚫ Due Jul 24th, 11:50 PMAssume University Bank desires to hold 10% of deposits as reserve balances. Based on the t-account below:T-Account for University BankAssets ($millions)Liabilities ($millions)Loans40 Deposits100Securities40Reserve balances 20Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aUniversity Bank could increase loans by $10 million, ceteris paribus.bUniversity Bank could increase securities by $10 million, ceteris paribus.C University Bank could increase reserve balances by $10 million, ceteris paribus.dAnswer A and Answer B are both options available to University Bank, ceteris paribus.Your answer

The question involves analyzing the T-account for University Bank and determining what changes can…

Answered: Question 8 Homework • Answered ⚫ Due…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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ملزمة- تطبيقات-اقتصاد- كلی.pdf C:/Users/iM/Desktop/S-sbaiöl-üläubi-ä تم يز B عرض الصفحة A قراءة بصوت عال | V رسم 34) Suppose the required reserve ratio is 15%. A $10 million deposit will, at most, allow an expansion of the money supply to A) $147.5 million. B) $250 million. C) $150 million. D) $66.7 million.
19) Vault cash is equal to $8 million, deposits by depository institutions at the central bank are $2 million, the monetary base is $40 million, and bank deposits are $90 million. The money multiplier is equal to A) 2.5. B) 3.0. C) 4.0. D) 5.0. Answer: B Please give the process of calculation
Northern Bank: Balance Sheet Assets Liabilities Deposits Capital $7,000 $1,000 $8,000 Reserves $420 $7,580 $8.000 Loans Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio, Northern Bank must and O A. increase its reserves by $140; decrease its deposits by $140 O B. increase its reserves by $280; increase its loans by $380 OC. increase its reserves by $280; decrease its deposits by $280 O D. increase its reserves by $140; decrease its loans by $140 O E. not change its reserves; not change its deposits
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. Hubert, a client of First Main Street Bank, deposits $500,000 into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 500,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Eileen, who immediately uses the funds to write a check to Clancy. Clancy…
2-A bank has deposits of $ 6 000 000 , its total actual reserves are $1 200 000 and the legal reserve ratio is 0.12 . (a) What is the amount of reserves ? (b) What is the amount of excess reserves ? (c) If the reserve ratio changes to 0.10 what would be the effect on reserves and total actual reserves ,amount of excess reserves remaining the same ?
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-The Golden State Bank has total cash reserves of $110,000, deposits of $200,000, and loans of $90,000. The reserve requirement is 5 percent. This bank can make additional loans up to the amount of: $10,000 $5,500 $100,000 $190,000
14. With reference to the Federal Reserve's M1 and M2 measures of the money supply, please indicate whether funds held in each of the forms listed below are included only in M1, only in M2, in both M1 and M2, or in neither M1 nor M2. (a) Money market mutual fund shares. (b) Bank reserves. ге (c) Demand deposits. (d) Small (under $100,000) certificates of deposit. (e) Currency in circulation.
9
Question 15 A bank with no excess reserves has a target reserve ratio of 0.1. It has $800 in reserves and $850 in government bonds. Its only other asset is loans to customers, and its only liability is customer deposits. What is the dollar value of loans to customers? (Round to two decimal places and do not enter the currency symbol. If your answer is $6.114, enter 6.11. If your answer is $6.115, enter 6.12. If appropriate, remember to enter the - sign.)
Deposit Reserve Requirement Money Multiplier Potential Money Creation $1,000 10% From above $1,000 20% From above $1,000 25% From above With a deposit of $1,000 and the reserve requirement of 10% what is the potential money creation? Group of answer choices $5,000 none of the above $10,000 $4,000
The central bank buys $10,000 worth of bonds in the open market from Elaine, who deposits the proceeds in her checking account at MSM Bank. The required reserve ratio is 5%. (a) What is the amount by which MSM Bank’s liabilities have changed? Explain. (b) Calculate the change in required reserves for MSM Bank. Show your work. (c) What is the dollar value of the maximum amount of new loans MSM Bank can initially make as a result of Elaine’s deposit? Explain. (d) Based on the central bank’s open-market purchase of bonds, calculate the maximum amount by which the money supply can change throughout the banking system. Show your work. (e) How will the change in the money supply in part (d) affect aggregate demand and the price level in the short run? Explain.

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